News: Optoelectronics
30 October 2020
Marvell acquiring Inphi
Bermuda-based Marvell Technology Group Ltd (which provides semiconductors for storage, processing, networking, security and connectivity infrastructure) and Inphi Corp of San Jose, CA, USA (a provider of high-speed mixed-signal ICs for communications, computing and data-center markets) have announced a definitive agreement, unanimously approved by the boards of directors of both companies, for Marvell to acquire Inphi for $66 in cash and 2.323 shares of stock of the combined company for each Inphi share. Upon closing of the transaction, Marvell shareholders will own about 83% of the combined company and Inphi stockholders will own about 17%.
Marvell intends to finance the transaction with cash on hand, plus additional financing. The firm has obtained debt financing commitments from JPMorgan Chase Bank N.A. The transaction is not subject to any financing condition and is expected to close by second-half 2021, subject to the approval of Marvell shareholders and Inphi stockholders and the satisfaction of customary closing conditions (including applicable regulatory approvals).
In conjunction with the transaction, Marvell (whose US headquarters is in Santa Clara, CA) intends to reorganize so that the combined company will be domiciled in the USA, creating a US-based semiconductor firm with an enterprise value of about $40bn.
Inphi has built a high-speed data interconnect platform that is claimed to be uniquely suited to meeting the demand for increased bandwidth and low power for future cloud data centers and global networks. Inphi’s high-speed electro-optics portfolio provides the connectivity fabric for cloud data centers and wired and wireless carrier networks, just as Marvell’s copper physical layer portfolio does for enterprise and future in-vehicle networks. Combining Marvell’s storage, networking, processor and security portfolio with Inphi’s electro-optics interconnect platform aims to provide end-to-end technology for data infrastructure. It is reckoned that this complementary transaction will expand Marvell’s addressable market (to $23bn), strengthen its customer base, and enhance its position in hyperscale cloud data centers and 5G wireless infrastructure.
Machine learning and other data-driven workloads have expanded beyond the confines of the server and now span the entire cloud data center, making the software-defined data center the new computing paradigm, says the firms. This trend drives hyper-connectivity within the data center, putting electro-optical interconnects at the heart of the cloud architecture. In addition, the need for bandwidth between data centers continues to grow rapidly. Combined with Internet traffic growth and the rollout of new ultra-fast 5G wireless networks, the importance of Inphi’s high-speed data interconnect solutions will only accelerate, it is reckoned. The combined company will be positioned to serve the data-driven world, addressing high-growth end-markets – cloud datacenter and 5G.
The combined scale should provide more resources and capabilities to continue to invest and better manage the rapidly ramping process technology costs. The transaction is expected to generate annual run-rate synergies of $125m (to be realized within 18 months after the transaction closes) and is expected to become accretive to Marvell’s non-GAAP earnings per share by the end of the first year after the transaction closes.
“Our acquisition of Inphi will fuel Marvell’s leadership in the cloud and extend our 5G position over the next decade,” reckons Marvell’s president & CEO Matt Murphy. “Inphi’s technologies are at the heart of cloud data-center networks and they continue to extend their leadership with innovative new products, including 400G data-center interconnect optical modules, which leverage their unique silicon photonics and DSP [digital signal processing] technologies. We believe that Inphi’s growing presence with cloud customers will also lead to additional opportunities for Marvell’s DPU and ASIC products,” he adds.
“Marvell and Inphi share a vision to enable the world’s data infrastructure and we have both transformed our respective businesses to benefit from the strong secular growth expected in the cloud data-center and 5G wireless markets” says Inphi’s president & CEO Ford Tamer. “Combining with Marvell significantly increases our scale, accelerates our access to the next generations of process technology, and opens up new opportunities in 5G connectivity.” Upon closing the transaction, Tamer will join Marvell’s board of directors.
